Dazzle, Inc. produces beads for jewelry making use. Thefollowing information summarizes production operations and salesactivities for June. The journal entry to record June sales is:
Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate(based on direct labor) 155% Goods transferred to finishedgoods 432,000 Cost of goods sold 444,000 Credit sales 810,000
a.Debit Accounts Receivable $810,000; credit Cost of Goods Sold$810,000.
b.Debit Accounts Receivable $810,000; credit Sales $366,000;credit Finished Goods Inventory $444,000.
c.Debit Cost of Goods Sold $444,000; credit Sales $444,000.
d.Debit Finished Goods Inventory $444,000; debit Sales $810,000;credit Accounts Receivable $810,000; credit Cost of Goods Sold$444,000.
e.Debit Accounts Receivable $810,000; credit Sales $810,000;debit Cost of Goods Sold $444,000; credit Finished Goods Inventory$444,000.
2. A process cost summary is amanagerial accounting report that describes all but which of thefollowing:
a.The gross profit earned on the sale of products.
b.The equivalent units of production by the department.
c.How the costs were assigned to the output.
d.Physical transfers for a department.
e.The costs charged to a department.
3. During January, the productiondepartment of a process operations system completed and transferredto finished goods a total of 78,000 units. At the end of January,9,000 additional units were in process in the production departmentand were 65% complete with respect to labor. The beginninginventory included labor cost of $37,100 and the productiondepartment incurred direct labor cost of $294,300 during January.Compute the direct labor cost per equivalent unit for thedepartment using the weighted-average method.
a.$6.34.
b.$3.77.
c.$3.51.
d.$4.25.
e.$3.95.
4.Which of the following is thebest explanation for why it is necessary to calculate equivalentunits of production in a process costing environment?
a.In most manufacturing environments, it is not possible toconduct a physical count of units.
b.Companies often use a combination of a process costing and joborder costing systems.
c.In most process costing systems, direct materials are added atthe beginning of the process while conversion costs are addedevenly throughout the manufacturing process.
d.All of the work to make a unit 100% complete and ready to moveto the next stage of production or to finished goods inventory maynot have been completed in a single time period.
e.In most cases, there is no difference between physical unitsand equivalent units of production.
5.The following refers to unitsprocessed by a breakfast cereal maker in August. Compute the totalequivalent units of production with respect to conversion for Julyusing the weighted-average inventory method.
Tons of Product Percentof
Conversion Added Beginning Work in Process 230,000 60% Goods started 570,000 100% Goods completed 620,000 100% Ending Work in Process 180,000 70%
a.758,000
b.800,000
c.620,000
d.746,000
e.884,000
6.During December, the productiondepartment of a process operations system completed and transferredto finished goods a total of 65,000 units of product. At the end ofMarch, 15,000 additional units were in process in the productiondepartment and were 80% complete with respect to materials. Thebeginning inventory included materials cost of $57,500 and theproduction department incurred direct materials cost of $183,000during December. Compute the direct materials cost per equivalentunit for the department using the weighted-averagemethod.
a.$3.70.
b.$2.38.
c.$2.82.
d.$3.12.
e.$4.79.
Dazzle, Inc. produces beads for jewelry making use. Thefollowing information summarizes production operations and salesactivities for June. The journal entry to record June sales is:
| Direct materials used | $87,000 |
| Direct labor used | 160,000 |
| Predetermined overhead rate(based on direct labor) | 155% |
| Goods transferred to finishedgoods | 432,000 |
| Cost of goods sold | 444,000 |
| Credit sales | 810,000 |
a.Debit Accounts Receivable $810,000; credit Cost of Goods Sold$810,000.
b.Debit Accounts Receivable $810,000; credit Sales $366,000;credit Finished Goods Inventory $444,000.
c.Debit Cost of Goods Sold $444,000; credit Sales $444,000.
d.Debit Finished Goods Inventory $444,000; debit Sales $810,000;credit Accounts Receivable $810,000; credit Cost of Goods Sold$444,000.
e.Debit Accounts Receivable $810,000; credit Sales $810,000;debit Cost of Goods Sold $444,000; credit Finished Goods Inventory$444,000.
2. A process cost summary is amanagerial accounting report that describes all but which of thefollowing:
a.The gross profit earned on the sale of products.
b.The equivalent units of production by the department.
c.How the costs were assigned to the output.
d.Physical transfers for a department.
e.The costs charged to a department.
3. During January, the productiondepartment of a process operations system completed and transferredto finished goods a total of 78,000 units. At the end of January,9,000 additional units were in process in the production departmentand were 65% complete with respect to labor. The beginninginventory included labor cost of $37,100 and the productiondepartment incurred direct labor cost of $294,300 during January.Compute the direct labor cost per equivalent unit for thedepartment using the weighted-average method.
a.$6.34.
b.$3.77.
c.$3.51.
d.$4.25.
e.$3.95.
4.Which of the following is thebest explanation for why it is necessary to calculate equivalentunits of production in a process costing environment?
a.In most manufacturing environments, it is not possible toconduct a physical count of units.
b.Companies often use a combination of a process costing and joborder costing systems.
c.In most process costing systems, direct materials are added atthe beginning of the process while conversion costs are addedevenly throughout the manufacturing process.
d.All of the work to make a unit 100% complete and ready to moveto the next stage of production or to finished goods inventory maynot have been completed in a single time period.
e.In most cases, there is no difference between physical unitsand equivalent units of production.
5.The following refers to unitsprocessed by a breakfast cereal maker in August. Compute the totalequivalent units of production with respect to conversion for Julyusing the weighted-average inventory method.
| Tons of Product | Percentof Conversion Added | |
| Beginning Work in Process | 230,000 | 60% |
| Goods started | 570,000 | 100% |
| Goods completed | 620,000 | 100% |
| Ending Work in Process | 180,000 | 70% |
a.758,000
b.800,000
c.620,000
d.746,000
e.884,000
6.During December, the productiondepartment of a process operations system completed and transferredto finished goods a total of 65,000 units of product. At the end ofMarch, 15,000 additional units were in process in the productiondepartment and were 80% complete with respect to materials. Thebeginning inventory included materials cost of $57,500 and theproduction department incurred direct materials cost of $183,000during December. Compute the direct materials cost per equivalentunit for the department using the weighted-averagemethod.
a.$3.70.
b.$2.38.
c.$2.82.
d.$3.12.
e.$4.79.
Related questions
Hello, someone posted the answers (below) to my question. ButI'd like someone to explain how they arrived at each of the numbersin the journal entries so I can learn how to figure it out on myown later. Thanks in advance for your help.
Problem 4-16 Cost Flows [LO1]
Natureâs Way, Inc., keeps one of its production facilities busymaking a perfume called Essence de la Vache. The perfume goesthrough two processing departments: Blending and Bottling. |
The following incompleteWork in Process account is provided for the Blending Department forMarch: |
| Work in ProcessâBlending |
| March 1 balance | 33,500 | Completed and transferred to Bottling (760,000ounces) | ? | |
| Materials | 138,600 | |||
| Direct labor | 63,200 | |||
| Overhead | 477,000 | |||
| March 31 balance | ? | |||
The $33,500 beginning inventory inthe Blending Department consisted of the following elements:materials, $8,100; direct labor, $3,600; and overhead applied,$21,800. |
Costs incurred during March in theBottling Department were: materials used, $45,000; direct labor,$16,800; and overhead cost applied to production, $106,000. |
| Required: |
| 1. | Prepare journal entries to record the costs incurred in both theBlending Department and Bottling Department during March.(Omit the "$" sign in your response.) |
| a. | Raw materialswere issued for use in production. |
| b. | Direct laborcosts were incurred. |
| c. | Manufacturing overhead costs for the entire factory wereincurred, $626,000. (Credit Accounts Payable and use a singleManufacturing Overhead control account for the entire factory.) |
| d. | Manufacturingoverhead was applied to production using a predetermined overheadrate. |
| e. | Units that were complete with respect to processing in theBlending Department were transferred to the Bottling Department,$642,000. |
| f. | Units that were complete with respect to processing in theBottling Department were transferred to Finished Goods,$710,000. |
| g. | Completed unitswere sold on account for $1,450,000. The cost of goods sold was$600,000. |
Expert Answer
| Debit | Credit | ||
| a) | Work in process (Bottling) | $ 45,000 | |
| Work in process (Blending) | $ 138,600 | ||
| Raw materials | $ 183,600 | ||
| Raw materials used for production | |||
| b) | Work in process (Bottling) | $ 16,800 | |
| Work in process (Blending) | $ 63,200 | ||
| Salaries payable | $ 80,000 | ||
| Direct labor cost incurred on production | |||
| c) | Manufacturing overheads | $ 626,000 | |
| Accounts payable | $ 626,000 | ||
| Incurred Manufacturing overhead costs forthe entire factory for $626,000 | |||
| d) | Work in process (Bottling) | $ 106,000 | |
| Work in process (Blending) | $ 477,000 | ||
| Manufacturing Overheads | $ 583,000 | ||
| Manufacturing overhead applied to production | |||
| e) | Work in process - Bottling | $ 642,000 | |
| Work in process - (Blending) | $ 642,000 | ||
| Units transferred to Bottling | |||
| f) | Finshed goods | $ 710,000 | |
| Work in process - Bottling | $ 710,000 | ||
| Units transferred to finished goods | |||
| g) | Accounts receivable | $1,450,000 | |
| Sales | $1,450,000 | ||
| Goods sold on account | |||
| Cost of goods sold | $ 600,000 | ||
| Finished Goods | $ 600,000 | ||
| Cost of goods sold worth $600,000 |
Financial Accounting, 14th Edition
Final_Multiple choice
1. The primary objectives of control over inventory are
a.safeguarding the inventory from damage and maintainingconstant observation of the inventory
b.reporting inventory in the financial statements
c.maintaining constant observation of the inventory andreporting inventory in the financial statements
d.safeguarding inventory from damage and reporting inventory inthe financial statements
2. When merchandise sold is assumed to be in the order in whichthe purchases were made, the company is using
a.first-in, last-out
b.first-in, first-out
c.last-in, first-out
d.average cost
3. Use the information below to answer the followingquestion.
The Boxwood Company sells blankets for $60 each. The following wastaken from the inventory records during May. The company had nobeginning inventory on May 1.
| Date | Blankets | Units | Cost |
| May 3 | Purchase | 5 | $20 |
| 10 | Sale | 3 | |
| 17 | Purchase | 10 | $24 |
| 20 | Sale | 6 | |
| 23 | Sale | 3 | |
| 30 | Purchase | 10 | $30 |
Assuming that the company uses the perpetual inventory system,determine the gross profit for the sale of May 23 using the FIFOinventory cost method.
a.$72
b.$108
c.$180
d.$120
4.If merchandise inventory is being valued at cost and thepurchase price is steadily falling, which method of costing willyield the largest net income?
a.FIFO
b.LIFO
c.average cost
d.weighted average
5.Stevens Company started the year with an inventory cost of$145,000. During the month of January, Stevens purchased inventorythat cost $53,000. January sales totaled $140,000. Estimated grossprofit is 35%. The estimated ending inventory as of January 31is
a.$58,000
b.$107,000
c.$69,300
d.$91,000
6. Which one of the following below is not anelement of internal control?
a.risk assessment
b.cost-benefit considerations
c.monitoring
d.information and communication
7. A check drawn by a company for $340 in payment of a liabilitywas recorded in the journal as $430. What entry is required in thecompany's accounts?
a.debit Cash; credit Accounts Receivable
b.debit Accounts Receivable; credit Cash
c.debit Accounts Payable; credit Cash
d.debit Cash; credit Accounts Payable
8. A bank reconciliation should be prepared
a.to explain any difference between the company's balance perbooks with the balance per bank
b.by the company's bank
c.whenever the bank refuses to lend the company money
d.by the person who is authorized to sign checks
9.
Pilger Corporation has cash on hand at year-end of $201,000 anda negative cash flow from operations of $144,000. What is the ratioof cash to monthly cash expenses?
a.1.4 months
b.7.2 months
c.12.0 months
d.16.8 months
10. When does an account become uncollectible?
a.when accounts receivable is converted into notesreceivable
b.when a discount is availed on notes receivable
c.at the end of the fiscal year
d.there is no general rule for when an account becomesuncollectible
11.On the balance sheet, the amount shown for the Allowance forDoubtful Accounts is equal to the
a.total estimated uncollectible accounts as of the end of theyear
b.sum of all accounts that are past due
c.total of the accounts receivables written-off during theyear
d.uncollectible accounts expense for the year
12. Allowance for Doubtful Accounts has a debit balance of $600at the end of the year (before adjustment), and an analysis ofaccounts in the customers ledger indicates uncollectiblereceivables of $13,000. Which of the following entries records theproper adjusting entry for bad debt expense?
a.debit Allowance for Doubtful Accounts, $600; credit Bad DebtExpense, $600
b.debit Bad Debt Expense, $600; credit Allowance for DoubtfulAccounts, $600
c.debit Bad Debt Expense, $13,600; credit Allowance for DoubtfulAccounts, $13,600
d.debit Bad Debt Expense, $12,400; credit Allowance for DoubtfulAccounts, $12,400
13. When comparing the direct write-off method and the allowancemethod of accounting for uncollectible receivables, a majordifference is that the direct write-off method
a.is used primarily by small companies with few receivables
b.is used primarily by large companies with many receivables
c.uses an allowance account
d.uses a percentage of sales method to estimate uncollectibleaccounts
14. Accumulated Depreciation
a. is used to show the amount of cost expiration ofintangibles
b.is used to show the amount of cost expiration of naturalresources
c.is the same as Depreciation Expense
d.is a contra asset account
15. Equipment with a cost of $220,000 has an estimated residualvalue of $30,000 and an estimated life of 10 years or 19,000 hours.It is to be depreciated by the straight-line method. What is theamount of depreciation for the first full year, during which theequipment was used 2,100 hours?
a.$19,000
b.$21,000
c.$30,000
d.$22,000
16. The process of transferring the cost of metal ores and otherminerals removed from the earth to an expense account is called
a.depreciation
b.depletion
c.amortization
d.deferral
17. The Bacon Company acquired new machinery with a price of$15,200 by trading in similar old machinery and paying $12,700. Theold machinery originally cost $9,000 and had accumulateddepreciation of $5,000. In recording this transaction, BaconCompany should record
a.a loss of $1,500
b.the new machinery at $12,700
c.a gain of $1,500
d.the new machinery at $16,700
18. Assuming a 360-day year, when a $50,000, 90-day, 9%interest-bearing note payable matures, total payment will be
a.$54,500
b.$4,500
c.$1,125
d.$51,125
19. Which of the following is required to be withheld fromemployee's gross pay?
a.only federal income tax
b.both federal and state unemployment compensation taxes
c.only state unemployment compensation tax
d.only federal unemployment compensation tax
20. Hall Company sells merchandise with a one-year warranty. Inthe current year, sales consisted of 4,500 units. It is estimatedthat warranty repairs will average $10 per unit sold, and 30% ofthe repairs will be made in the current year and 70% in the nextyear. In the current year's income statement, Hall should showwarranty expense of
a.$45,000
b.$0
c.$13,500
d.$31,500
21. Which of the following below is not acharacteristic of a limited liability company?
a.limited legal liability
b.unlimited life
c.taxable
d.moderate ability to raise capital
22. Seth and Beth have original investments of $50,000 and$100,000 respectively in a partnership. The articles of partnershipinclude the following provisions regarding the division of netincome: interest on original investment at 10%; salary allowancesof $27,000 and $18,000, respectively; and the remainder to bedivided equally. How much of the net income of $42,000 is allocatedto Seth?
a.$20,000
b.$23,000
c.$32,000
d.$0
23. Which of the following is not a rightpossessed by common stockholders of a corporation?
a.the right to share in assets upon liquidation
b.the right to receive a minimum amount of dividends
c.the right to sell their stock to anyone they choose
d.the right to vote in the election of the board ofdirectors
24. The charter of a corporation provides for the issuance of100,000 shares of common stock. Assume that 45,000 shares wereoriginally issued and 5,000 were subsequently reacquired. What isthe amount of cash dividends to be paid if a $2 per share dividendis declared?
a.$80,000
b.$100,00
c.$90,000
d.$10,000
25.Which statement below is not a reason for acorporation to buy back its own stock?
a.to increase the shares outstanding
b.for supporting the market price of the stock
c.resale to employees
d.bonus to employees
